Warning over 22% rise in business rates

English and Welsh retailers could be facing increases of up to 22% in business rates next year, it has been warned.

English and Welsh retailers could be facing increases of up to 22% in business rates next year, it has been warned.

The British Retail Consortium says members will be hit by a double blow in April. On top of the standard inflationary increase, based on this month's Retail Prices Index, businesses will also face hikes as a result of this year's recalculation of rateable values.

Businesses have been shielded from the full impact of the new valuations by a phasing-in programme, which means that bills will rise in April next year.

BRC director general Stephen Robertson said: "September's RPI is expected to be above 4% but few retailers have budgeted for increases as large as 4% to 5%.

"We're urging the Government to use alternatives to September's RPI to calculate next April's bills. The coalition has already changed the way pensions are calculated. It's now using CPI rather than RPI - this change could also apply to business rates. Another option is to use the 12-month average RPI rate from October 2009 to September 2010 - which would help to iron out inflation volatility.

"For the longer-term, retailers need more predictability and a permanent move to a more stable way of calculating business rates."

James Lowman, chief executive of the Association of Convenience Stores, said: "The burden of business rates is one of the most significant cost pressures on retailers - we urge Government to think carefully about the burden of increasing the rate again in 2011. There is a strong case for freezing business rates altogether."

Businesses with a rateable value of up to £18,000 (£25,500 in London) qualify for a 50% reduction on their business rates. This applies to virtually all wine merchants and many bars and restaurants.